But, Canara and Oriental Bank of Commerce turn the tide on lower provision, rising interest and fee incomes.
Subdued treasury income and higher provisioning requirement have dented profitability of three Mumbai-based state-run lenders for October-December, but Bangalore-based Canara Bank reported a 50 per cent jump in its net profit on lower provisioning.
Bank of India has reported a decline in its net profit for the second straight quarter, as its net profit dipped 53.44 per cent to Rs 406 crore compared to Rs 872 crore reported in the same period of the previous year.
With Rs 650 crore of fresh non-performing assets (NPAs) being added to the Bank of India’s book, NPA provisioning increased 115 per cent to Rs 446 crore. Both net and gross NPAs jumped to 1.03 per cent and 2.67 per cent from 0.52 per cent and 1.63 per cent, respectively.
Bank of India Chairman Alok Misra said the bank aimed to bring down net NPA to 1 per cent and gross NPA to 2 per cent by March-end, as it was expecting a healthy credit offtake. Net interest income marginally declined to Rs 1,495 crore for the reporting period.
Canara Bank, on the other hand, reported a 50 per cent jump in net profit at Rs 1,053 crore in the quarter. Its total income rose by just 1.6 per cent to Rs 5,469 crore.
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The bank has cut down its non-tax provisions by 52.5 per cent to Rs 167.4 crore during the quarter compared to a year-ago period. A sharp decline in the cost of deposits, which stood at 6.25 per cent compared to 6.81 per cent in the corresponding quarter last year, also helped the lender.
Its net interest income rose by 18.8 per cent to Rs 1,478 crore compared to the year-ago period.
“For the first time in the history of the bank, net profit has crossed Rs 1,000 crore in any quarter. This is despite unfavourable environment of low credit growth and hardening of bond yields. The bank could maintain the spread by increasingly focusing on core business growth and containing cost,” AC Mahajan, chairman and managing director, Canara Bank, said.
Another Mumbai-based public sector lender Central Bank of India saw a 13 per cent fall in net profit to Rs 308.44 crore for the third quarter against Rs 353.2 crore at the end of the previous comparable quarter.
The bottom line was pulled down by a jump in provisions, which were Rs 178.35 crore compared to a write-back of Rs 97.15 crore in the corresponding quarter last year. Of this, provisions for gross NPAs grew to Rs 15.92 crore from Rs 10.91 crore in the year-ago quarter.
Net interest income, or the difference between interest earned and interest expended, grew 8 per cent to Rs 731.3 crore from Rs 671.9 crore at the end of the December 2008 quarter.
Dena Bank has also reported a fall in net profit by 4.2 per cent to Rs 134.5 crore on account of a decline in treasury income and net interest income.
The absence of a one-time gain of Rs 32 crore as interest on income tax refund recorded in the year-ago quarter also weighed on the bottom line. Dena Bank’s trading profit fell to Rs 5.6 crore from Rs 49 crore in the corresponding quarter last year.
“We have excess liquidity of Rs 2,300 crore in the third quarter, which was deployed in mutual funds having very low returns. Interest earned form mutual fund investments was only Rs 28 crore,” said Dena Bank Chairman and Managing Director DL Rawal.
The saving grace was fee-based income, which grew nearly 23 per cent to Rs 83.27 crore from Rs 56.56 crore in the December 2008 quarter.
Another state-run lender Oriental Bank of Commerce (OBC) has posted a 14.76 per cent rise in net profit to Rs 289.43 crore in the third quarter compared with Rs 252 crore in the corresponding quarter a year ago. The growth was led by a rise in interest income and fee-based income.
Total income rose 7 per cent to Rs 2,909.27 crore from Rs 2,718.20 crore in the same period last year, as treasury profit in the quarter came down to Rs 51 crore from Rs 184.8 crore last year.
“The profit in the third quarter has come on the back of interest income and non-interest income,” OBC Chairman and Managing Director TY Prabhu said.
The bank is also planning a follow-on public offer (FPO) after capital infusion from the government. The bank has requested the government to infuse Rs 1,500 crore.
Capital adequacy ratio stood at 13.20 per cent as per Basel-II and 11.66 per cent as per Basel-I. Interest income showed a growth of 11 per cent to Rs 2,671.59 crore in the quarter compared with Rs 2,400 crore in the corresponding period last year. Net interest margin improved to 3 per cent in the quarter against 2.02 per cent in the same period last year.
The business of the bank increased to Rs 189,299 crore at the end of December 2009, registering a growth of 20.58 per cent. Total deposits increased by 21.39 per cent to Rs 110,745 crore, while Casa deposits rose to Rs 27,050 crore.
The bank’s branch network reached 1,461 at December-end and it is planning to have 1,500 branches by the end of March this year. So far, it has opened 61 branches in the current financial year.
Federal Bank net down 46%
Federal Bank has registered a 46 per cent drop in net profit in the third quarter of the current financial year. The net profit dropped to Rs 110.25 crore from Rs 203.89 crore in the same period last year. Its operating profit dropped to Rs 331.54 crore from Rs 386.32 crore last year.
Sundaram Finance net jumps 83%
Sundaram Finance has reported a 83 per cent increase in net profit for the quarter ended December 2009 to Rs 55.38 crore from Rs 30.69 crore in the previous comparable period. Total income rose 7 per cent to Rs 293.09 crore from Rs 274.02 crore.
The Always-based old-generation private sector bank’s total income in the third quarter went up to Rs 1,061.12 crore from Rs 1,041.23 crore. Total expenditure for the period increased to Rs 729.58 crore from Rs 656.82 crore. Interest expense increased to Rs 563.53 crore from Rs 491.83 crore. Total income for the nine-month period increased from Rs 2,814.87 crore to Rs 3,120.41 crore, showing an increase of 10.85 per cent. Total business increased to Rs 60,617 crore. Net Profit for first half was up 30.16 per cent, from Rs 182.43 crore to Rs 237.45 crore.